Ask

#Definition

The ask (also called the offer) is the lowest price at which a seller is willing to sell shares in a market. In prediction markets, the ask represents the minimum price a trader must pay to immediately purchase Yes or No shares. The difference between the ask and the bid (highest buying price) forms the bid-ask spread.

When you place a market buy order, you pay the ask price. When you see a prediction market quoting "$0.52 ask," it means$0.52 is the cheapest available price to buy shares right now.

#Why It Matters in Prediction Markets

The ask price directly affects trading costs and strategy execution. Understanding ask dynamics helps traders:

Evaluate true entry costs: The displayed probability in many interfaces represents mid-market price, but actual purchases execute at the ask. A market showing 50% might cost $0.52 to buy—a 4% higher effective price.

Assess market liquidity: The gap between bid and ask (the spread) indicates how costly it is to enter and exit positions. Tight spreads signal active, liquid markets; wide spreads warn of higher trading costs.

Time entries strategically: Ask prices fluctuate based on order book depth and trading activity. Patient traders can often achieve better prices than those who need immediate execution.

Calculate breakeven probabilities: If you pay $0.55 ask to buy Yes shares, you need greater than 55% probability to profit—not the mid-market 52% the interface might display.

#How It Works

The ask price emerges from the limit orders placed by sellers in the market:

#Order Book Mechanics

1. Sellers place limit orders specifying the minimum price they'll accept
2. These orders queue in the order book, sorted by price (lowest first)
3. The lowest sell order becomes the ask price
4. When a buyer submits a market order, it fills against available asks starting from the lowest

Example order book (Yes shares):

The ask is $0.52. A market buy for 500 shares fills entirely at$0.52. A market buy for 1,000 shares fills 500 at $0.52 and 500 at$0.53.

#Ask in AMM-Based Markets

Automated Market Makers don't use traditional order books. Instead, the "ask" is calculated from the AMM's pricing function based on current reserves.

For a constant-product AMM:

Ask Price ≈ Current Price × (1 + price_impact)

Where price impact increases with order size relative to pool liquidity. In AMM markets, the effective ask rises as you try to buy larger quantities.

#Calculating Effective Ask

For a $100 purchase in an AMM market with 60% displayed probability:

Effective Ask = Total Cost / Shares Received

If $100 buys 185 Yes shares (due to slippage): Effective Ask =$100 / 185 = $0.54

The effective ask ($0.54) exceeds the displayed price ($0.60) due to slippage.

#Examples

Tight spread market: A high-profile election market shows bid $0.48, ask$0.49. The 1-cent spread indicates high liquidity and low trading costs. A trader can enter at $0.49 and exit at$0.48 with minimal friction.

Wide spread market: An obscure regulatory market shows bid $0.35, ask$0.45. The 10-cent spread means entering costs 10% more than exiting. Traders need strong conviction to overcome this cost disadvantage.

Moving ask: During live election returns, the ask price fluctuates rapidly as new results arrive. A trader watching the ask move from $0.55 to$0.62 in minutes recognizes that informed traders are buying aggressively, pushing up the price.

Size-dependent ask: A trader wants to buy $5,000 worth of shares. The displayed ask is$0.52, but only $500 is available at that price. The remaining$4,500 fills at progressively higher prices ($0.53,$0.54, $0.55), resulting in an average ask of$0.54.

#Risks and Common Mistakes

Ignoring the spread: Traders who focus only on the mid-market price underestimate true costs. Entering at the ask and exiting at the bid means paying the full spread as transaction cost.

Market orders in thin markets: Placing large market orders in illiquid markets can result in fills far above the displayed ask. Always check order book depth before executing.

Confusing displayed price with execution price: Platform interfaces often show probability percentages or mid-market prices. The actual purchase price (ask) may be significantly higher, especially in less liquid markets.

Failing to account for both sides: In binary markets, if you buy Yes at the ask ($0.52), you're implicitly selling No at the bid ($0.48). The spread affects both sides of any position.

Chasing moving asks: In fast markets, repeatedly raising limit orders to chase a rising ask often results in poor fills. Set a price limit and accept missing the trade if the ask moves beyond it.

#Practical Tips for Traders

• Always check the ask price before entering positions—don't rely on displayed probability alone

• Use limit orders at or slightly above the bid to avoid paying the full ask spread on non-urgent trades

• Calculate your breakeven probability based on your actual entry price (ask), not the mid-market or displayed price

• Check depth beyond the best ask for larger orders; the price you see is only valid for the size shown

• Compare ask prices across platforms for the same event—the same market may have different spreads and better execution elsewhere

• Factor the spread into position sizing: if the spread is 5%, you're starting 5% down on any round-trip trade

• Watch ask behavior for information signals—rapidly rising asks often indicate informed buying pressure

#Related Terms

• Bid
• Bid-Ask Spread
• Order Book
• Liquidity
• Slippage
• Automated Market Maker (AMM)
• Market Order
• Limit Order

#FAQ

#What is the difference between bid and ask?

The bid is the highest price buyers are willing to pay; the ask is the lowest price sellers are willing to accept. If you want to buy immediately, you pay the ask. If you want to sell immediately, you receive the bid. The gap between them is the bid-ask spread, which represents the cost of immediate execution.

#Why is the ask always higher than the bid?

If the ask were equal to or lower than the bid, the orders would immediately execute against each other. The spread exists because buyers want to pay less and sellers want to receive more. The difference represents disagreement about fair value, liquidity provider profit margins, or uncertainty about the true probability.

#How does the ask work in AMM prediction markets?

AMM markets don't have explicit ask prices from limit orders. Instead, the pricing algorithm calculates a buy price based on current pool reserves. This effective ask increases with order size—larger purchases experience more slippage and pay higher average prices. The "ask" in AMM markets is dynamic and size-dependent rather than fixed.

#Should I always use limit orders to avoid paying the ask?

Limit orders below the ask save money when filled but risk missing trades if prices move away. For urgent trades or fast-moving markets, paying the ask via market order may be worthwhile to guarantee execution. For non-urgent positions, patient limit orders often achieve better prices. Balance execution certainty against price improvement based on your situation.

#How do I know if an ask price is fair?

Compare the ask to: (1) your own probability estimate—if your estimate is lower than the ask, the price isn't attractive; (2) prices on other platforms for the same event; (3) the current bid-ask spread—very wide spreads suggest illiquidity and potentially unfair pricing. There's no objective "fair" ask; fairness depends on your beliefs and alternatives.